Question

ABC Company has received and paid the below invoices during the month of December 2017. For each question below, provide the corresponding journal entry. Invoices will not be capitalized.

Vendor	Invoice Amount (Received in Dec)	Payment Amount (Paid in Dec)
Pwc	$750	$0
Dropbox	$5,000	$3,000
Clean	$40,000	$10,000

1. What journal entry should ABC Company. record at the time the Pwc invoice is received?

2. What journal entry should ABC Company. record at the time the Dropbox invoice is received?

3. What journal entry should ABC Company record at the time the Dropbox invoice is paid?

4. Assuming the balance owed to Clean at November 30, 2017 is $0, what is the balance owed to Clean at December 31, 2017?

Answer 1

Here, since the invoices are related to the month of Decemeber only. So, we will book an expense of the invoice amount in December Journal.The unpaid amount will be recorded as a liability for the month of Decemeber.

Required Journal entries are:

1. When the invoice of Pwc is received

Debit: Expense 750

Credit Expense payable 750

(for invoice received and expense recognised)

2. When the invoice of Dropbox is received

Debit: Expense 5000

Credit Expense payable 5000

(for invoice received and expense recognised)

3. When the invoice of Dropbox is paid

Debit: Expense payable 3000

Credit Cash 3000

(for invoice paid )

4. Balance owed to Clean in November was $0. In the month of December 2017, invoice of $40000 was received. Out of $40000, the amount paid in December was $10000. So, the remaining or outstanding balance on December 31, 2017 is $30000.